Three city councilmen who voted in June to enact new city fees and raise some existing ones were presented with a lawsuit and a court summons this week by a residents' group that claims some of the fees are illegal.
The group, which calls itself the Orange County Taxfighters Assn., filed suit against the city last week in Orange County Superior Court in an effort to stop the city from collecting three fees.
The council, in an effort to close a $5.6-million budget deficit, approved several new fees, including a cultural arts fee for developers and an "arts in public places fee," both of which assess a percentage of a development's value.
The council also approved increases in water rates, building-license fees, hotel bed taxes, street-lighting assessments and business-license fees.
The lawsuit contends that the street-lighting assessment and the new cultural arts fee actually are taxes and were levied without the two-thirds voter approval mandated by state law. The suit adds that the water rate hike is an effort by the city to tax its own water department, which is illegal under state law. The city is expected to generate more than $2 million annually from the three fees.
"There's nothing we can do to stop them from raising taxes if they do it legally," said Bruce Broadwater, an insurance broker who serves as group spokesman. "But they violated the law." Among those named in the suit are Mayor W.E. (Walt) Donovan and Councilmen Frank Kessler and Mark Leyes, the majority that approved the increases. Councilmen Robert F. Dinsen and J. Tilman Williams, who opposed the increases, are not named.
A hearing date has not yet been set.
"We do have negative people in this town who just assume that we go broke," Donovan said angrily after being handed the lawsuit and summons during Tuesday's council meeting.
"This city is in deep trouble," Kessler added. "Due to the lack of funds in this community, it's in desperate need of more, not less."